Washington AG Sues Couple For Equity Skimming

admin —  February 2, 2009 — 2 Comments

Anthony Napier and Alicia Napier, Colfax, Washington, are being sued by the Washington Attorney General’s Office on claims that Anthony and his wife ran a real estate investment business that misled distressed homeowners and property investors.

Attorney General Rob McKenna and Assistant Attorney General Jack Zurlini filed new documents in Spokane County Superior Court that accuse Anthony and Alicia Napier of skimming equity from distressed homeowners in Eastern Washington and misleading investors. It’s alleged their dirty deals left a trail of victims – families who lost their homes, renters who never recouped security deposits and investors who never saw profits.

“We will continue to use our enforcement powers to stop equity skimmers and illegal investment promoters from preying on Washington residents,” McKenna said. “Anthony Napier may not have learned his lesson the first time, but he and his wife better figure it out now.”

The state’s civil complaint lays out a pattern of deceptive practices involving the Napiers starting around 1995, when Anthony Napier was involved in a criminal equity-skimming scheme. He was convicted of equity skimming, first-degree theft and third-degree theft in September 1998 in Spokane County Superior Court. He was released from jail after serving part of a 12-month sentence.

The Attorney General’s Office filed a civil lawsuit in early 1997 connected with the same equityskimming plot that led to Anthony Napier’s criminal conviction. The office alleged that Anthony Napier and his company No Money Down Homes, Inc., had violated the state’s Consumer Protection Act.

During litigation, the Napiers filed for bankruptcy. The state eventually obtained a judgment against Anthony Napier and his company in July 2002. The judgment prohibited Napier, his company and anyone working with him from engaging in equity skimming and any other unfair or deceptive act or practice in connection with real estate transactions.

“We’re now alleging that only a short time after he was criminally convicted of equity skimming and had a civil judgment entered against him, Anthony Napier formed a new company, Principle Direct Investments, LLC,” Zurlini said, “and along with his wife started a new business venture in which they once again engaged in illegal activities that are also in violation of the judgment.”

In court documents, the Attorney General’s Office alleges the defendants did the following:

-Engaged in equity-skimming schemes in which defendants purchased residences from distressed homeowners by promising to cover payments on their existing mortgages for a period of time and then later pay them off completely. Defendants benefitted by receiving cash payments of tens of thousands of dollars at the time the deal closed or by collecting rents on the properties, and then later letting the homes go into foreclosure when they stopped covering the homeowners’ mortgage payments. In one example, former homeowners were initially told they wouldn’t have to pay rent until they became qualified under a housing program and then they would pay only $50 per month. The defendants later evicted the victims for nonpayment of rent.

-Misrepresented their business as an organization to help distressed homeowners.

-Defendants told the Community Action Center in Pullman, WA, that they wanted to help first-time homeowners and had experience in helping people stay in their homes. On the contrary, the defendants contacted the organization to locate distressed properties they could strip equity from.

-Misrepresented to certain investors how their funds would be used and the return they should expect. Defendants did not use all of the investment funds to purchase properties and didn’t properly secure the funds as they had represented to trusting investors. And an information packet designed to attract investors falsely stated that PDI had been successfully investing in real estate ventures for several years, that the company had a large marketing campaign and that investors would receive 13-15 percent annual returns.

-Illegally marketed and sold securities through the promotion of a Fractional Investor Owner Program, by which individual investors agreed to form a limited liability company and invest $2,500 up front, plus additional contributions of at least $100 per month over the next three years.

-Used company funds for personal expenses, substantially reducing the assets of PDI and its ability to repay its obligations to investors and creditors. For example, Anthony Napier bought his wife a dozen roses each month.

-Placed deceptive classified ads in newspapers sold in Washington, Oregon and Idaho. Ads targeting investors included false claims such as a “30% PLUS RETURN.” Defendants also advertised rentals they didn’t actually own.

-Failed to disclose to renters that foreclosures were pending on the rental property or claimed foreclosures had been stopped or delayed. In fact, the foreclosures continued and tenants lost both rent and security deposits, which defendants failed to place in trust accounts.

-Transferred company-owned properties to Alicia Napier. Defendants failed to inform investors and creditors about the joint agreement between PDI and Alicia Napier. As a result of transferring company assets to Alicia Napier, defendants substantially reduced the assets of PDI and its ability to repay its obligations to investors and creditors.

The Attorney General’s Office is asking for new injunctions to stop the deceptive business practices, civil penalties of up to $25,000 for each individual defendant who violated the 2002 judgment plus

additional civil penalties for the recent violations, restitution for victims and reimbursement of legal costs.

Jan Quintrall, president/CEO of the Better Business Bureau Serving Eastern Washington, North Idaho and Montana, praised the state for its work to protect homeowners. “Washington residents are fortunate to have such a pro-active and even-handed Attorney General to work with,” Quintrall said. “BBB values its partnership with the Washington Attorney General’s Office on addressing issues concerning the breach of ethics that are giving legitimate real estate agents and investors a bad name.”

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2 responses to Washington AG Sues Couple For Equity Skimming

  1. Funny thing… homeowners are accusing Attorney General…and Attorney General is charging homeowners……….

  2. I was just served a 30 day vacate notice from my landlord. I found out this home is in forclosure by a notice posted to my door showing an upcoming trustee sale. My landlords were very upset I found out about this. I have paid all rent on time and am not behind now. The sale is set for the 11th of sept and I have a potential bidder. They are trying t kick me out 11 days before sale because I told them I would not sign a formal rental agreement while they are on trustees sale list. I also asked them to do some repairs that they have neglected for 9 months. I have also pointed out to them there is a hole in my bedroom ceiling that has been there since nov and is now covered in mold. I have had lung problems for last 90 days and have been told I need to be tested for exposure to mold. Can I sue for some of my rent paid back or file a claim against their home owners insurance if its found to be mold?

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